Global logistics technology provider Descartes has acquired NetCHB to enhance cross-border customs filings for e-commerce companies.
Descartes is paying $40 million in upfront cash plus an additional amount based on NetCHB achieving certain revenue targets in the first two years post-acquisition. That additional amount is payable under an all-cash performance earn-out and maxes out at $60 million.
NetCHB automates customs filing processes in the U.S. Its cloud-based platform is used by more than 700 customs brokers to connect to the U.S. Customs and Border Protection’s Automated Broker Interface to electronically execute customs declarations and security filings.
The company has been building out its capabilities to address regulatory filings under Section 321 Type 86 for e-commerce shipments. That is a voluntary filing initiative for low-value e-commerce goods that CBP introduced in 2019 to streamline border crossing. NetCHB said that 45% of all Type 86 filings are processed by its technology.
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“Section 321 Type 86 compliance is complex, but brokers and forwarders that take advantage of it can reduce the amount of time e-commerce packages are waiting for customs release,” said Ken Wood, EVP of product management at Descartes. “NetCHB’s platform automates the declaration process for high volumes of e-commerce shipments and helps keep them moving quickly to consumers, helping some of the largest e-commerce customs brokers and forwarders process shipments in a compliant and efficient manner.”
Section 321 was initially announced as part of the 2016 Trade Facilitation and Trade Enforcement Act (TFTEA). Since its introduction, e-commerce shipments have skyrocketed, so in 2019, CBP introduced Type 86, which further streamlines the process for entry into the U.S. for low-value (under $800) e-commerce shipments. The goal of the program was to facilitate faster trade without burdening customs or increasing risk.
“As the digitization of the logistics and supply chain industry picks up pace, we continue to invest in complementary solutions that add depth and breadth to our global logistics network (GLN),” said Edward J. Ryan, Descartes’ CEO. “NetCHB has a team of deep customs domain experts, scalable and robust technology solutions, and a large group of customers that will benefit from additional solutions available on the GLN to help them manage the life cycle of shipments.”